PARIS (Reuters) - Harry Winston Diamond Corp is looking to sell
its watch and jewellery business to concentrate on mining, and has been
approaching potential buyers, a source close to the matter said.

As always when this type of activity hits the market,
the big names in luxury, like LVMH and PPR, figure prominently among
potential acquirers. The value of Harry Winston's luxury segment, which
includes watches, jewellery and retail salons around the world, is
around $766 million, or $9 per share, said RBC Capital Markets analyst Irene Nattel in a note to clients. "But on a transaction basis, we would expect (Harry
Winston) to get a premium," she said. "Looking at precedent
transactions, the range is relatively wide, but the most relevant
appears to be the late 2011 acquisition of Bulgari by LVMH."

LVMH bid 3.7 billion euros ($4.85 billion) for Italy's
Bulgari in March 2011, offering a 60 percent premium to the average
share price over the month prior to the deal. By applying the same premium, Nattel sees Harry
Winston's luxury brand alone worth some $1.2 billion net of debt, or $14
per share. She maintained her "outperform" rating and $19 price target
on the stock.

LVMH, the world's biggest luxury group, owns jewellers
Fred and Chaumet as well as watchmakers Tag Heuer, Hublot and Zenith and
is on the lookout for potential acquisitions.

PPR, which owns jeweller Boucheron and watch brands
Girard-Perregaux and JeanRichard, has always said it wanted to make
acquisitions in "hard luxury," namely watches and jewellery.

Both PPR and LVMH declined to comment, as did a spokeswoman for Harry Winston.

Harry Winston
Harry Winston, which started as a small jeweller in New
York in 1924, was made famous by a reference in Marilyn Monroe's song
"Diamonds Are a Girl's Best Friend". Every year the firm lends out
hundreds of millions of dollars worth of jewels to be worn by actresses
on the red carpet at events like the Oscars.